-- Posted Tuesday, 25 August 2009 | Digg This Article
| | Source: GoldSeek.com
Dec Gold: Open= 943.8 High= 956.3 Low= 943.1 Last= 945.7 +2.0
A positive Consumer Confidence survey helped boost equities briefly this morning, as the report showed not only a sharp increase from July, but also an upward revised figure for last month. The good vibes were cut short a few minutes later when the White House released its revised budget forecast, finding itself playing Debbie Downer this morning. Over the next 10 years, the Obama Administration acknowledges that the deficit will likely double, adding an additional $9 trillion of money to be paid back to borrowers. The estimated pace of economic growth for next year was slashed as well.
Equities dropped sharply in the wake of the news, tried to then rally but ultimately could not shake the negative focus on the budget forecast. A rally in gold this morning evaporated when the budget revision was released, as did similar moves in the energies. In fact, while gold finished slightly up, but well off the highs of the day, crude oil finished down $3.00 a barrel. While stocks have been rallying to new highs in the past few days, commodities have not been following. Gold certainly has not made a new high since February, and crude oil topped out again at $75 a barrel.
Is this where economic reality sets in and traders acknowledge that while the recession may be ending, or over, the country is in for a very tough slog ahead. Taxes will surely be raised and economic output is likely to lag, as money that could be put into the economy must be repaid to our debtors and an ever increasing rate. With new home and advanced durable good sales released tomorrow, a worse-than-expected reading could trigger more selling in the market. Initial jobless claims and a revision of 2nd Quarter GDP are released Thursday.
Traders should be ready to make a move in the market at this stage, but if aggressive traders are to make an early call on the market, buy some option protection in case the market breaks out in the opposite direction. There is a healthy bit of skepticism in the markets that this recovery will not be straight up and so sets up a potential correction, or downside breakout. December call options, with only three months remaining, may not hold their value well if this market breaks down for a month or more, so buyer beware.
Economic sentiment in Asia has softened somewhat in the past few weeks and the inability of U.S. commodities to follow equities higher signal a divergence in the markets. Bulls need a clean sweep of better-than-expected economic reports to keep a correction at bay.
Review charts on these markets here www.britefutures.com. Remember that futures and options can be used for bullish or bearish positions; feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use our online paper trading service BriteTrak, contact me at tom@altavest.com. Visit www.altavest.com to request a Free Trading Kit. Keep in mind that there is risk of loss in all trading.
Thank you,
Thomas Hartmann
Altavest Worldwide Trading, Inc.
800 994 9566 x109
949 488 0545 x109
Fax 949 488 7625
-- Posted Tuesday, 25 August 2009 | Digg This Article | Source: GoldSeek.com
